Who Let The Street Down?

As Yet another turbulent year draws to a close, it’s time to see who quashed investors’ hopes on the street. Though the second half of the year saw share prices of a number of top companies coming back on track, some stocks still remained painfully low. B&E finds out the top value destroyers for the year among the BSE 100 constituents

55Slow demand hits all

IT giant Infosys topped the chart biggest wealth destroyers (in %). Affected by a slowdown in revenue from Western clients remained the biggest problem for the company. Between Jan 2, 2012 and December 15, 2012, it lost 15.91% of its m-cap. ONGC stood second with 15.66% reduction in its m-cap due to slow oil and natural gas discovery in the new fields and poor yield from existing assets. Two companies from Adani group made it to this not-to-be-proud list. Adani Enterprises suffered due to increasing international prices and a forced 7% promotor’s stake sale to meet compulsory share holding norms, while Adani Power faced issues due to low margins. GMR infrastructure suffered various bottlenecks including sectoral and its own internal issues.

54Western disturbances hit Infy

In absolute terms, Infosys and ONGC lost market capitalization to the tune of Rs.178.94 billion and Rs.106.60 billion respectively between Jan 2, 2012 and December 15, 2012. Among others Bharti Airtel saw its m-cap coming down by Rs.39.42 billion due to lower user base and less than expected average revenue per user. However, it is expected that the capex made by the company may soon bring a change in its fortune in the next financial year and a good recovery is on cards for the telecom giant. Rising non-performing assets troubled Punjab National Bank to a great extent during the year. During the given period, the bank’s market capitalisation fell by Rs.3.38 billion.

57Hopes on policy front!

A comparison of top 5 wealth destroyers with Sensex unlocks a very contrasting story. While the benchmark BSE Sensex gained 25.51% in the considered period, all these companies witnessed a substantial erosion in their market capitalization. A similarity between these companies is that all of them belong to the sectors which are in trouble currently. However, with some conclusive policy decisions coming soon one can expect these companies to move up in the coming financial year. For example, a company like Infosys is genuinely expected to be better as soon as the US and European markets come back to colour. Similarly, further disinvestment may improve ONGC’s m-cap in the coming year.

58Weak show by hulks

For the quarter ending 30th September 2012, Infosys registered a 24.24% yoy growth in its revenues while its PAT grew by 28.54%. Both these figures were significantly below the industry expectations and added strongly to the company’s poor show on Dalal street. Second in line, ONGC did not even manage to add to its profit on a year-on-year basis. Its bottomline declined a mammoth 31.77% while the revenue shrank by 9.44% yoy. Adani group faced issues which were mostly due to external factors and brought down their profits and revenues substantially. GMR Infrastructure made losses due to high interest payments and a payment tussle at Maldives airport.

59Here is the breather

Surprisingly, United Spirits, which belongs to all-in-trouble, debt-loaded UB Group, managed to deliver the most – 290.84% – to its shareholders. The company has been immensely benefited by its majority stake sale to world’s largest spirit maker, Diageo. A demand boom in consumer products helped Godrej Consumer Products to boost both its topline and bottomline. The company registered a whooping 122.90% jump in its market capitalization during the considered period. Rest three in the list of top five are all banking and finance companies. On grounds of strong demand for retail loans and high interest rates, all of them saw their financials and market capitalization soar by more than 100%.